Poland: Tax relief on employees under the age of 26 as of 1 August 2019

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As of the 1st August 2019, employees (Polish citizens and foreign nationals) under the age of 26 are no longer obliged to pay income tax, a decrease from a rate of 18%, provided the employee in question is employed on the basis of an employment contract (fixed or part time) or ‘contract of mandate’- this therefore excludes employees that are employed on the basis of a task-specific contract or self-employed. A contract of mandate has more flexibility than an employment contract, such as the freedom to shape the contents of the contract and to choose the date and place the work is completed.

The introduction of this relief is part of the Polish government’s mission aimed at providing an easier start at the labour market for young adults and attracting / retaining young talent, as currently many young adults are immigrating to other countries in the European Union.

Maximum tax bracket for the relief

The maximum sum of non-taxed income to qualify for this new relief is 85, 528 PLN per annum, the equivalent to £18,037.86 GBP per annum. Therefore, if an individual earns above this bracket, they need to pay income tax on the proportion of income above this maximum amount.

Employer obligations

In order to be compliant with these changes, the employer is should:

• Consider introducing templates of declarations for employees/contractors under the age of 26, in case they want to receive the sum resulting from tax relief along with their remuneration in 2019 (the benefits due for 2019 will be received along with the tax return in 2020). The employer is not required to hand over the declaration to the employee to sign.
• Starting from 1st January 2020, ensure that personal income tax is not deducted from remuneration of all the employees/contractors under the age of 26, provided the non-taxed income does not exceed 85, 528 PLN.

Further Information

For further information or to discuss any of the issues raised, please contact Agnieszka Fedor on +48 22 608 7150 at Sołtysiński Kawecki & Szlęzak – www.skslegal.pl.